Abe sets agenda as G20 leaders head to Osaka

Security is being massively upgraded. Tiger-suited local matrons are rapping welcome songs, and Prime Minister Shinzo Abe has laid out a hopeful agenda for the G20 summit, which takes place in the port city of Osaka on Friday and Saturday.

The timing of the summit, amid trade tensions and jitters in the Middle East, comes just weeks before elections for Japan’s Upper House, and offers Abe the possibility of upbeat pre-election optics.

Though seen by some as an ultra-nationalist, Abe has sought to prize open Japan’s economy with free-trade agreements with the EU and 11 Asia-Pacific economies. He has promoted nascent immigration policies and focused on inbound tourism.

The G20 is the first of three high-profile international events set to take place in Japan this year and next, the second and third being the Rugby World Cup, from September to November this year, and the Tokyo Summer Olympics in 2020.

Eyes on Trump

The talking shop of the world’s 20 richest countries will be in and around the Intex Osaka convention center on the city’s waterfront. Some 37 leaders of countries and international organizations are scheduled to attend. Guests will include the big three – US President Donald Trump, Chinese President Xi Jinping and Russian President Vladimir Putin.

Given current global developments, all eyes are expected to be on Trump. He has said he will be meeting with Xi – to discuss the ongoing trade war, and possibly developments in North Korea, following Xi’s state visit to meet with Kim Jong Un last week.

Political discussions are also likely to be at the fore when Trump meets Russian President Vladimir Putin and Turkish President Recep Erdogan.

Abe, in a syndicated editorial picked up by global media today, laid out his agenda for the two-day pow-wow. He focused on three issues: maintaining the international trade order; upgrading digitization, cross-border; and tackling global pollution with innovative solutions.

On free trade, he talked up the China-sponsored Regional Comprehensive Economic Partnership (RCEP), a free-trade agreement linking the 10-member Association of Southeast Asian Nations (ASEAN) with six Indo-Pacific states (Australia, China, India, Japan, South Korea, and New Zealand).

“Those discussions have gone on for some time,” Abe wrote, urging his fellow Asia leaders to get moving. “We must now make a dash toward the goal line.”

The RCEP, if signed, ratified and implemented, would be the world’s largest free-trade area, though India fears an influx of cheap Chinese goods, and Australia and New Zealand want labor and environmental clauses worked in.

Rival trade deals

Abe’s promotion of the China-led RCEP comes with the Japan-led, 11-nation Comprehensive and Progressive Agreement for the Trans-Pacific Partnership, or CPTPP, already in effect – minus the United States, which pulled out in one of US President Donald Trump’s first acts in office. It has been speculated that if RCEP gets up and running, leaving US producers and farmers out in the cold, Washington might rethink joining CPTPP.

The Japanese leader, who faces security concerns with North Korea and China, has leaned closer than any other world leader to Trump, but the two are at odds over free trade. Trump’s withdrawal from TPP was seen as a humiliation for Abe, and Trump now seeks a bilateral free-trade agreement with Japan, which Tokyo has agreed to negotiate with some reluctance.

Still, Abe diplomatically did not take a swipe at Trump, reserving his ire instead for the World Trade Organization. “A quarter-century has passed since the WTO was established,” he wrote. “During that time, the world economy has changed at amazing speed. However, the WTO has failed to keep up, and the adverse effects of this are becoming increasingly apparent.”

The WTO has been in deadlock since the failure of the Doha Round of negotiations in 2001, leading to nations and economic blocs to form bilateral and multinational trade agreements. Abe wondered how to make the WTO “relevant again as a guardian of free and fair international trade.”

Abe offered modern Asia, as a vision for the prosperity that free trade brings. “The region’s economies have benefitted from the free flow, in and out, of people and goods.” He specifically mentioned ASEAN without mentioning China or South Korea – countries with which he has a more conflicted relationship, largely over historical issues.

Abe’s second item – digitalization, had he said, “enabled unprecedented business models, but has also brought new challenges, such as double non-taxation for multinational companies. We can resolve such issues only through international co-operation.”

To enable cross-border data transfers, “Japan is advocating a system of data free flow with trust, or DFFT, which would allow the free flow of data under rules upon which all can rely,” he wrote. “The process for doing that is what we call the ‘Osaka Track,’ which we hope to launch at the upcoming summit.”

Abe’s third agenda item – like his first, is hardly a key Trump priority – is “the importance of innovation in tackling global environmental challenges.”

Noting that global warming goals “are not achievable through regulation alone,” Abe called for “disruptive innovation that flips something negative into something positive.”

He raised the possibility of turning CO2 from a liability to a resource, and cited such innovative technologies as artificial photoysynthesis. “In Osaka, I want the G20 to confirm the importance of such innovation,” he wrote, adding that in October, Japan will host a global conference on environmental innovation.

Abe – who has been criticized in China and slammed in South Korea for refusing to fully acknowledge Japan’s wartime past, but has largely been free of such attacks in Southeast Asia – finished with a parting shot on future focus.

He quoted a slogan: “If you have time to look back, then move forward instead.” “That positive attitude was a way of life for the generations of postwar Japanese who brought about our rapid economic growth,” he wrote. “By the 1980s, that attitude had spread across the ASEAN region.”

This future focus, he wrote, “is a way of life for broader Asia — that is, for the entire Indo-Pacific. And a self-confident Japan is a Japan that is well-suited to contribute to creating Asia’s future.”

Osaka prepares

Osaka, the industrial port where the two-day summit will be held, is known for its 16th-century samurai castle, its inner-city canals, its tradition of street food, and the jokey nature of residents and its large community of Korean migrants.

The city gained some cinematic fame with Ridley Scott’s beautifully-shot East-West thriller “Black Rain.” While that 1989 film focused on US cops taking on a rogue Yakuza gangster, Japan remains one of the safest countries in the world, but city officials are taking no chances.

Some 32,000 police from 46 prefectures are being deployed to ease congestion, tamp down possible protests or terror concerns. In an anti-terrorist move, coin-operated lockers and trash cans at rail stations in western Japan have reportedly been shut down, irking commuters will have to lug luggage around with them until the summit concludes on Saturday. Tourists may be also be disappointed by being unable to access the iconic, gull-winged Osaka Castle, which is expected to be used as a backdrop for G20 events.

Some 700 schools in the city will close on the summit days in order to reduce congestion, according to local press reports, though the city government is urging residents to stay off the streets. Heavy traffic, and possible flight delays, are anticipated at Kansai and Itami airports.

‘The Funniest City in the World’

But not all are irked by the anticipated inconveniences. An Osaka-based group of elderly women, “Obachaaan” has produced and posted on YouTube a rap video to hail the incoming heavy hitters.

The video, “Oba Funk Osaka” is in English. Its lyrics include “Let’s talk! Let’s dance! Here is Osaka wonderful city!”

An Obachan, Kyodo news agency explains, is Japanese for an older lady, “…and Osaka Obachan are noted for being loud, witty, talkative and friendly.”

The video features local grannies, in tiger-print threads, dancing in the streets and extolling the virtues of what they insist is “The funniest city in the world.”

Alas, as far as Asia Times is able to tell, no world leader has passed comment yet, or attempted the Oba Funk dance. Maybe they should give it a shot.

Asia Times

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell